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(B) Two or more responsible bidders are willing and able to compete effectively for the business; and

(C) The procurement lends itself to a firm fixed price contract and the selection of the successful bidder can be made principally on the basis of price.

(11) If sealed bids are used, the following requirements apply:

(A) The invitation for bids will be publicly advertised and bids shall be solicited from an adequate number of known suppliers, providing them sufficient time prior to the date set for opening the bids;

(B) The invitation for bids, which will include any specifications and pertinent attachments, shall define the items or services in order for the bidder to properly respond;

(C) All bids will be publicly opened at the time and place prescribed in the invitation for bids;

(D) A firm fixed-price contract award will be made in writing to the lowest responsive and responsible bidder. Where specified in bidding documents, factors such as discounts, transportation cost, and life cycle costs shall be considered in determining which bid is lowest. Payment discounts will only be used to determine the low bid when prior experience indicates that such discounts are usually taken advantage of; and

(E) Any or all bids may be rejected if there is a sound documented reason.

(3) Procurement by competitive proposals. The technique of competitive proposals is normally conducted with more than one source submitting an offer, and either a fixed-price or costreimbursement type contract is awarded. It is generally used when conditions are not appropriate for the use of sealed bids. If this method is used, the following requirements apply:

(i) Requests for proposals will be publicized and identify all evaluation factors and their relative importance. Any response to publicized requests for proposals shall be honored to the maximum extent practical;

(ii) Proposals will be solicited from an adequate number of qualified sources;

(iii) Grantees and subgrantees will have a method for conducting tech

nical evaluations of the proposals re ceived and for selecting awardees; í

(iv) Awards will be made to the te sponsible firm whose proposal is most advantageous to the program, with price and other factors considered; and

(V) Grantees and subgrantees may use competitive proposal procedures for qualifications-based procurement of architectural/engineering (AVE) professional services whereby competitors qua. qualifications are evaluated and the most qualified competitor is selected, subject to negotiation of fair and rea sonable compensation. The method where price is not used as a selection factor, can only be used in procurement of AE professional services. It cannot be used to purchase other types of services though AE firms are a po tential source to perform the proposed effort.

(4) Procurement by noncompetitive proposals is procurement through solicitation of a proposal from only one source, or after solicitation of a number of sources, competition is determined inadequate.

(1) Procurement by noncompetitive proposals may be used only when the award of a contract is infeasible under small purchase procedures, sealed bids or competitive proposals and one of the following circumstances applies:

(A) The item is available only from a single source;

(B) The public exigency or emergency for the requirement will not permit a delay resulting from competitive solicitation.

(C) The awarding agency authorizes noncompetitive proposals; or

(D) After solicitation of a number of sources, competition is determined inadequate.

(ii) Cost analysis, i.e., verifying the proposed cost data, the projections of the data, and the evaluation of the specific elements of costs and profit, is required.

(iii) Grantees and subgrantees may be required to submit the proposed procurement to the awarding agency for pre-award review in accordance with paragraph (g) of this section.

(e) Contracting with small and minority firms, women's business enterprise and labor surplus area firms. (1) The grantee and subgrantee will take all necessary

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affirmative steps to assure that minor- be used in all other instances to deterity firms, women's business enter- mine the reasonableness of the proprises, and labor surplus area firms are posed contract price. used when possible.

(2) Grantees and subgrantees will ne(2) Affirmative steps shall include: gotiate profit as a separate element of

(i) Placing qualified small and minor- the price for each contract in which ity businesses and women's business there is no price competition and in all enterprises on solicitation lists;

cases where cost analysis is performed. (ii) Assuring that small and minority To establish a fair and reasonable profbusinesses, and women's business en- it, consideration will be given to the terprises are solicited whenever they complexity of the work to be perare potential sources;

formed, the risk borne by the contrac(iii) Dividing total requirements, tor, the contractor's investment, the when economically feasible, into small amount of subcontracting, the quality er tasks or quantities to permit maxi of its record of past performance, and mum participation by small and minor industry profit rates in the surroundity business, and women's business en- ing geographical area for similar work. terprises;

(3) Costs or prices based on estimated (iv) Establishing delivery schedules, costs for contracts under grants will be where the requirement permits, which allowable only to the extent that costs encourage participation by small and incurred or cost estimates included in minority business, and women's busi- negotiated prices are consistent with ness enterprises;

Federal cost principles (see 1157.22). (v) Using the services and assistance Grantees may reference their own cost of the Small Business Administration, principles that comply with the appliand the Minority Business Develop cable Federal cost principles. ment Agency of the Department of (4) The cost plus a percentage of cost Commerce; and

and percentage of construction cost (vi) Requiring the prime contractor, methods of contracting shall not be if subcontracts are to be let, to take used. the affirmative steps listed in para- (8) Awarding agency review. (1) Grantgraphs (e)(2) (1) through (v) of this sec- ees and subgrantees must make availtion.

able, upon request of the awarding (1) Contract cost and price. (1) Grant- agency, technical specifications on proees and subgrantees must perform a posed procurements where the awardcost or price analysis in connection ing agency believes such review is with every procurement action includ needed to ensure that the item and/or ing contract modifications. The meth- service specified is the one being prood and degree of analysis is dependent posed for purchase. This review genon the facts surrounding the particular erally will take place prior to the time procurement situation, but as a start the specification is incorporated into a ing point, grantees must make inde- solicitation document. However, if the pendent estimates before receiving bids grantee or subgrantee desires to have or proposals. A cost analysis must be the review accomplished after a performed when the offeror is required solication has been developed, the to submit the elements of his esti- awarding agency may still review the mated cost, e.g., under professional, specifications, with such review usuconsulting, and architectural engineer- ally limited to the technical aspects of ing services contracts. A cost analysis the proposed purchase. will be necessary when adequate price (2) Grantees and subgrantees must on competition is lacking, and for sole request make available for awarding source procurements, including con- agency pre-award review procurement tract modifications or change orders, documents, such as requests for proposunless price resonableness can be es- als or invitations for bids, independent tablished on the basis of a catalog or cost estimates, etc., when: market price of a commercial product (1) A grantee's or subgrantee's prosold in substantial quantities to the curement procedures or operation fails general public or based on prices set by to comply with the procurement standlaw or regulation. A price analysis will ards in this section; or

(ii) The procurement is expected to exceed $25,000 and is to be awarded without competition or only one bid or offer is received in response to a solicitation; or

(iii) The procurement, which is expected to exceed $25,000, specifies a “brand name" product; or

(iv) The proposed award over $25,000 is to be awarded to other than the apparent low bidder under a sealed bid procurement; or

(v) A proposed contract modification changes the scope of a contract or increases the contract amount by more than $25,000.

(3) A grantee or subgrantee will be exempt from the pre-award review in paragraph (g)(2) of this section if the awarding agency determines that its procurement systems comply with the standards of this section.

(1) A grantee or subgrantee may request that its procurement system be reviewed by the awarding agency to determine whether its system meets these standards in order for its system to be certified. Generally, these reviews shall occur where there is a continuous high-dollar funding, and thirdparty contracts are awarded on a regular basis;

(ii) A grantee or subgrantee may selfcertify its procurement system. Such self-certification shall not limit che awarding agency's right to survey the system. Under a self-certification procedure, awarding agencies may wish to rely on written assurances from the grantee or subgrantee that it is complying with these standards. A grantee or subgrantee will cite specific procedures, regulations, standards, etc., as being in compliance with these requirements and have its system available for review.

(h) Bonding requirements. For construction or facility improvement contracts or subconstracts exceeding $100,000, the awarding agency may accept the bonding policy and requirements of the grantee or subgrantee provided the awarding agency has made a determination that the awarding agency's interest is adequately protected. If such a determination has not been made, the minimum requirements shall be as follows:

(1) A bid guarantee from each bidder equivalent to five percent of the bid price. The bid guarantee" shall consist of a firm commitment such as a bid bond, certified check, or other negotiable instrument accompanying a bid as assurance that the bidder will, upon acceptance of his bid, execute such contractual documents as may be required within the time specified.

(2) A performance bond on the part of the contractor for 100 percent of the contract price. A "performance bond" is one executed in connection with a contract to secure fulfillment of all the contractor's obligations under such contract.

(3) A payment bond on the part of the contractor for 100 percent of the contract price. A "payment bond" is one executed in connection with a contract to assure payment as required by law of all persons supplying labor and material in the execution of the work provided for in the contract.

(i) Contract provisions. A grantee's and subgrantee's contracts must contain provisions in paragraph (i) of this section. Federal agencies are permitted to require changes, remedies, changed conditions, access and records retention, suspension of work, and other clauses approved by the Office of Procurement Policy.

(1) Administrative, contractual, or legal remedies in instances where contractors violate or breach contract terms, and provide for such sanctions and penalties as may be appropriate (Contracts other than small pur

(2) Termination for cause and for convenience by the grantee or subgrantee including the manner by which it will be effected and the basis for settlement (All contracts in excess of $10,000).

(3) Compliance with Executive Order 11246 of September 24, 1965 entitled “Equal Employment Opportunity," as amended by Executive Order 11375 of October 13, 1967 and as supplemented in Department of Labor regulations (41 CFR part 60) (All construction contracts awarded in excess of $10,000 by grantees and their contractors or subgrantees).

(4) Compliance with the Copeland "Anti-Kickback” Act (18 U.S.C. 874) as


supplemented in Department of Labor (13) Mandatory standards and policies regulations (29 CFR part 3) (All con- relating to energy efficiency which are tracts and subgrants for construction contained in the state energy conservaor repair).

tion plan issued in compliance with the (5) Compliance with the Davis-Bacon Energy Policy and Conservation Act Act (40 U.S.C. 276a to a-7) as supple- (Pub. L. 94–163). mented by Department of Labor regulations (29 CFR part 5) (Construction

$1157.37 Subgrants.

$1157.37 contracts in excess of $2,000 awarded by (a) States. States shall follow state grantees and subgrantees when re law and procedures when awarding and quired by Federal grant program legis administering subgrants (whether on a lation).

cost reimbursement or fixed amount (6) Compliance with sections 103 and

basis) of financial assistance to local 107 of the Contract Work Hours and

and Indian tribal governments. States Safety Standards Act (40 U.S.C. 327-330)

shall: pplemented by Department of (1) Ensure that every subgrant inLabor regulations (29 CFR part 5).

cludes any clauses required by Federal (Construction contracts awarded by statute and executive orders and their grantees and subgrantees in excess of

implementing regulations; $2,000, and in excess of $2,500 for other

(2) Ensure that subgrantees are contracts which involve the employ

aware of requirements imposed upon ment of mechanics or laborers).

them by Federal statute and regula(7) Notice of awarding agency re

tion; quirements and regulations pertaining

(3) Ensure that a provision for comto reporting.

pliance with $1157.42 is placed in every (8) Notice of awarding agency re

cost reimbursement subgrant; and quirements and regulations pertaining

(4) Conform any advances of grant to patent rights with respect to any

funds to subgrantees substantially to discovery or invention which arises or

the same standards of timing and is developed in the course of or under

amount that apply to cash advances by such contract.

Federal agencies. (9) Awarding agency requirements and regulations pertaining to copy

(b) All other grantees. All other grant

ees shall follow the provisions of this rights and rights in data.

part which are applicable to awarding (10) Access by the grantee, the

agencies when awarding and adminsubgrantee, the Federal grantor agen

istering subgrants (whether on a cost cy, the Comptroller General of the

reimbursement or fixed amount basis) United States, or any of their duly au

of financial assistance to local and Inthorized representatives to any books,

dian tribal governments. Grantees documents, papers, and records of the

shall: contractor which are directly pertinent to that specific contract for the pur

(1) Ensure that every subgrant inpose of making audit, examination, ex

cludes a provision for compliance with cerpts, and transcriptions.

this part; (11) Retention of all required records

(2) Ensure that every subgrant infor three years after grantees or

cludes any clauses required by Federal subgrantees make final payments and

statute and executive orders and their all other pending matters are closed.

implementing regulations; and (12) Compliance with all applicable

(3) Ensure that subgrantees are standards, orders, or requirements is

aware of requirements imposed upon sued under section 306 of the Clear Air them by Federal statutes and regulaAct (42 U.S.C. 1857(h)), section 508 of

tions. the Clean Water Act (33 U.S.C. 1368). (c) Exceptions. By their own terms, Executive Order 11738, and Environ certain provisions of this part do not mental Protection Agency regulations apply to the award and administration (40 CFR part 15) (Contracts, sub- of subgrants: contracts, and subgrants of amounts in (1) Section 1157.10; excess of $100,000).

(2) Section 1157.11;

(3) The letter-of-credit procedures specified in Treasury Regulations at 31 CFR part 205, cited in $1157.21; and

(4) Section 1157.50.



$1157.40 Monitoring and reporting

program performance. (a) Monitoring by grantees. Grantees are responsible for managing the dayto-day operations of grant and subgrant supported activities. Grantees must monitor grant and subgrant supported activities to assure compliance with applicable Federal requirements and that performance goals are being achieved. Grantee monitoring must cover each program, function or activity.

(b) Nonconstruction performance reports. The Federal agency may, if it decides that performance information available from subsequent applications contains sufficient information to meet its programmatic needs, require the grantee to submit a performance report only upon expiration or termination of grant support. Unless waived by the Federal agency this report will be due on the same date as the final Financial Status Report.

(1) Grantees shall submit annual performance reports unless the awarding agency requires quarterly or semi-annual reports. However, performance reports will not be required more frequently than quarterly. Annual reports shall be due 90 days after the grant year, quarterly or semi-annual reports shall be due 30 days after the reporting period. The final performance report will be due 90 days after the expiration or termination of grant support. If a justified request is submitted by a grantee, the Federal agency may extend the due date for any performance report. Additionally, requirements for unnecessary performance reports may be waived by the Federal agency.

(2) Performance reports will contain, for each grant, brief information on the following:

(i) A comparison of actual accomplishments to the objectives established for the period. Where the output of the project can be quantified, a computation of the cost per unit of output

may be required if that information will be useful.

(ii) The reasons for slippage if established objectives were not met.

(iii) Additional pertinent information including, when appropriate, analysis and explanation of cost overruns or high unit costs.

(3) Grantees will not be required to submit more than the original and two copies of performance reports.

(4) Grantees will adhere to the standards in this section in prescribing performance reporting requirements for subgrantees.

(c) Construction performance reports. For the most part, on-site technical inspections and certified percentage-ofcompletion data are relied on heavily by Federal agencies to monitor progress under construction grants and subgrants. The Federal agency will require additional formal performance reports only when considered necessary, and never more frequently than quarterly.

(d) Significant developments. Events may occur between the scheduled performance reporting dates which have significant impact upon the grant or subgrant supported activity. In such cases, the grantee must inform the Federal agency as soon as the following types of conditions become known:

(1) Problems, delays, or adverse conditions which will materially impair the ability to meet the objective of the award. This disclosure must include a statement of the action taken, or contemplated, and any assistance needed to resolve the situation.

(2) Favorable developments which enable meeting time schedules and objectives sooner or at less cost than anticipated or producing more beneficial results than originally planned.

(e) Federal agencies may make site visits as warranted by program needs.

(f) Waivers, extensions. (1) Federal agencies may waive any performance report required by this part if not needed.

(2) The grantee may waive any performance report from a subgrantee when not needed. The grantee may extend the due date for any performance report from a subgrantee if the grantee will still be able to meet its perform

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